Ex-Qualcomm exec vp charged with insider trading

Former Merrill Lynch broker charged; they used offshore account

Jing Wang, a former executive vice president and president of global business operations at Qualcomm, was today (Sept. 23) charged with insider trading in stock of Qualcomm and Atheros, a company Qualcomm bought.

As a senior Qualcomm executive, Wang was repeatedly warned not to use material, non-public information in stock transactions. The broker involved was Gary Yin, formerly a senior vice president of the San Diego office of Merrill Lynch, a unit of Bank of America.

According to information released by the U.S. Attorney's office, Jing Wang spoke with Yin on how to set up a secret account in the British Virgin Islands that would conceal his trading activities. Jing Wang set up the account and his brother in China, Bing Wang, was falsely listed as the beneficial owner of the nominee account at the tax haven.

As a senior executive, in 2010 Wang learned that Qualcomm would boost its dividend and buy back some of its stock (a maneuver that normally raises the stock price.) Prior to the announcement, Wang told Yin to buy as much Qualcomm stock as he could to stash in the offshore account, according to the indictment.

In late 2010, Wang as an insider learned that Qualcomm intended to purchase Atheros. Wang told Yin to sell Qualcomm stock (the stock of a purchaser normally declines) and spend the proceeds on Atheros (whose stock would go up.) The Atheros stock was purchased for $34 a share. After the announcement, it rose to $44.50.

According to the indictment, in 2011, upon learning Qualcomm would release record results, Wang told Yin to sell the Atheros stock and buy Qualcomm. After release of the information, Qualcomm stock jumped by $4. The U.S. Attorney's office says Wang illegally gained a quarter of a million dollars from these three offshore deals, pulled off with inside information.

This is a criminal complaint charging Wang with obstruction of justice and money laundering, and Yin with conspiracy to commit offenses against the U.S.

Wang was taken into custody today and Yin will appear tomorrow. A warrant has been issued for Bing Wang, who is believed to be still living in China.

We can only speculate as to how this was detected. Sounds as if he did a pretty good job of disguising the ownership of the account and its trading activity. I'd guess that someone in the BVI ratted them out.

Visduh: This is one of the risks of stashing money offshore. Your offshore banker, knowing you are breaking the law, may shake you down for more money. If you don't cough it up, U.S. authorities are alerted. Best, Don Bauder

WANG PLEADS NOT GUILTY: Ying Wang pleaded not guilty in court today. He will be released on $3 million bond tomorrow and confined to his home and monitored by GPS when he will be required to secure the bond with sufficient assets. Best, Don Bauder

For short-term insider trading under 12(B) of the 1934 Securities Act, a purchase and sale or sale and purchase of securities within 6 month period automatically triggers scrutiny by SEC computers. The question is how investigators were able to relate the two brothers. Since there were short term profits on two or more transactions and a blood relationship with an insider, that would be enough to raise suspicion.

Jing Wang is listed on various websites as the Chairman of Qualcomm China, the Chinese arm of Qualcomm. As reported on this blog, the SEC is investigating Qualcomm for possible violations of the Foreign Corrupt Practices Act by making illegal payments to Chinese government officials. Wang's arrest may be related to the SEC investigation of Qualcomm. Wang may know every detail about these payments. Wang is a lawyer and graduated from a prestigious law school. The Feds may have gone through Wang's email during the FCPA investigation and discovered the stock fraud that way. The Feds may be trying to pressure Wang to reveal who within Qualcomm's management knew about or authorized the payments. The Feds may be trying to make an example of Qualcomm's management. This is just conjecture, but its hard to believe that there's no connection between Wang's arrest and the FCPA investigation. It's possible that the Jacobs could be forced out of Qualcomm's management if they authorized these payments.

Burwell: This guy is Jing Wang, not Jin Wang, but it does sound like the same person. And you are astute to point out that the government may have stumbled on to this as part of its investigation of Qualcomm. Best, Don Bauder

It was a typo. I meant Jing Wang. See the press release below. The Chinese officials probably had Bing Wang bumped off to shut him up. Bing's probably floating down the Yangtze river face down with a plastic bag over his head.

Burwell: If the Chinese government bumped off brother Bing Wang, it did not notify the U.S. Yesterday, the San Diego U.S. Attorney's office said, "A warrant has been issued for the arrest of Bing Wang, 53, who is believed to be a citizen and resident of China." The U.S. attempt to bring back Der Bingle may be futile. Best, Don Bauder

Burwell: Your batting average is 1.000 so I would never gainsay your prediction. Yes, Jing may rabbit. Incidentally, see post below: former Merrill Lynch stockbroker Yin pleaded guilty today. Give me a couple of minutes to get it up. Best, Don Bauder

FORMER MERRILL LYNCH STOCKBROKER GARY YIN PLEADS GUILTY. Former stockbroker Gary Yin of the Merrill Lynch unit of Bank of America pleaded guilty today (Sept. 24) to obstruction of justice and money laundering for Jing Wang, former Qualcomm executive vice president who was charged with insider trading yesterday.

According to the U.S. Attorney's office, Yin admitted that he helped Jing Wang in concealing Wang's insider trading using a secret offshore brokerage account at Merrill Lynch. He also agreed to Wang's request that he obstruct an ongoing Securities and Exchange Commission (SEC) investigation into Wang's activities, and he laundered the proceeds of Wang's insider trading.

Yin admitted that he agreed to conceal evidence that Wang had tried to hide his trade by setting up a shell company in the British Virgin Islands.

At Wang's direction, Yin obstructed justice by removing account documents that were subject to an SEC subpoena and taking them to China. There, Yin delivered the documents to Jing Wang's brother, Bing Wang, whose name was falsely on the British Virgin Islands account. In China, Yin and Bing Wang rehearsed a false cover story that Jing Wang had allegedly cooked up.

According to the U.S. Attorney's office, Yin also went over the trading history of the offshore account with Bing Wang, so he could tell a lie to U.S. authorities.

Also, to hide the proceeds of Wang's illegal trades, and to distance Wang from them, Yin transferred loot from one shell company's brokerage account to another. All told, Yin transferred $525,000 from accounts related to shell companies in the British Virgin Islands. Yin will be sentenced Dec. 16 at 9 a.m before U.S. District Court Judge William Q. Hayes.